Consumer caution persists during China's Golden Week holiday.

• During China's Golden Week holiday, there was a trend towards more cautious spending, and consumers placed a greater emphasis on experiences.
• Goldman Sachs analysts stated that weak domestic demand persisted due to low tourism spending per head and subdued services prices, which continued to downgrade consumption.
• On Wednesday, Kenneth Chow, principal at Oliver Wyman, informed CNBC that people are becoming more cautious with spending and are choosing more affordable travel options and locations.

During China's Golden Week holiday, there was a trend towards more cautious spending, and consumers placed a greater emphasis on experiences.

According to a Goldman Sachs analysis published Tuesday, the seven-day public holiday that ended Monday saw about 2% less spending per domestic trip compared to the pre-pandemic level.

The analysts stated that weak domestic demand persisted due to low tourism spending per head and subdued services prices, despite continued consumption downgrading.

The decline in sales was better than the 10% gap seen during the spring holidays, according to the Goldman report.

The last public holiday of the year in China is the Golden Week, which celebrates the founding of the People's Republic of China on Oct. 1.

Trip.com reported that nearly one-fifth of its holiday bookings came from users aged 20 to 25, making them the main consumer group. The company also noted that more than 90 concerts were held during the holiday, and that daily growth in orders for performances and exhibitions grew by an average of more than 80% during the period.

Despite the absence of blockbusters, box office earnings decreased to 2.1 billion yuan ($300 million) this year from 2.7 billion yuan last year, according to state media, as reported by the China Film Administration.

Consumers were also more spontaneous.

Nearly 30% of travelers booked travel on the same day or one day in advance, a 6 percentage point increase from last year, while the average number of days customers booked in advance fell to 6 days this year, down from 6.8 days last year, according to Trip.com.

Since the pandemic, consumer spending in China has been lackluster due to uncertainty about future income and economic growth, despite a holiday, policy announcements, and promises, and a stock market surge.

On Wednesday, Kenneth Chow, principal at Oliver Wyman, informed CNBC that people are becoming more cautious with spending and are choosing more affordable travel options and locations.

Luxury brands need to emphasize the benefits of their products to potential Chinese consumers, as people are more interested in spending on items they can discuss and share on social media, rather than just large purchases.

"As consumers become more sophisticated, brands must adapt to stay ahead, and the first to do so will win, according to Chow. This applies not only to Chinese and overseas brands but to any brand that can capture the attention of Chinese consumers first."

Appliance sales climb

UBS's Christine Peng, head of the Greater China consumer sector, stated on Wednesday that spending recovery during Golden Week was linked to appliance trade-in policies.

During the holiday, retail sales increased by 9%, while home appliance sales jumped by 149.1%, according to state media, without disclosing the total amount spent.

"In our view, the Golden Week consumption could indicate a slight improvement compared to August, thanks to trade-in subsidies and local government consumption vouchers, as evidenced by Shanghai's 3% retail sales increase, a reversal of the -3% YoY decline seen in August."

The number of domestic trips in mainland China during Golden Week increased by 125 million compared to the previous year and 190 million compared to before the pandemic, as per the Ministry of Culture and Tourism.

In 2019, China received 782 million domestic visits, but it was unclear whether the figures were comparable.

During this year's holiday, the average number of mainland China residents traveling across the border increased to 1.08 million a day from 1.01 million a day in 2019, according to CNBC calculations of official data.

According to Trip.com, Japan, Thailand, and the U.K. were among the most popular travel destinations.

Chinese mobile pay expands

During the first four days of the holiday, Alipay users' overseas transactions increased by 60% compared to the previous year, according to Alibaba-affiliate Ant Group.

According to Alipay, the top destinations for Chinese tourists in terms of transaction volume growth were Malaysia, Korea, Thailand, Hong Kong, and Singapore. Alipay pointed out that while shopping was a significant expense for Chinese tourists, they also spent significantly on entertainment, food and beverage, services, and transportation.

Alipay usage by foreign visitors in mainland China during the first four days of the holiday increased by more than double compared to the same period last year, according to the company. This increase is attributed to the introduction of visa-free travel for more countries and the ease of use of Alipay and WeChat Pay, the two dominant mobile payment apps in China.

During the holiday, the average number of visitors from mainland China in Hong Kong was 170,000 per day, which is 27% more than the previous year. On October 1st, Hong Kong recorded 220,000 visitors from the mainland, the highest number since the end of Covid-19 border controls.

In Hong Kong, hotels are adapting to lower prices per night by offering more food and experiences, as noted by Oliver Wyman's Chow.